Former Oppenheimer & Co. analyst Meredith Whitney, who recently started her own advisory group, says the number of U.S. banks could drop by half by the end of the current crisis.

Despite bankers’ complaints about the Troubled Asset Relief Program, Whitney says she does not expect to see many of the top banking companies repay their government capital anytime soon.

“You’ll see so much deck-chair movement that much of the TARP money will not be around to be repaid because many banks will be expected to absorb their neighbors,” Whitney told Bank Investment Consultant.

“Big banks will be forced to absorb all the liquidity that is coming out of the market and what will be interesting is if some of the smaller banks that get private capital will start to consolidate.”

Two more TARP problems Whitney sees are the “super-siloed” regulatory structure and the “pencil-ledger system” on which it relies.

“One division knows what they’re doing and they’re speaking Mandarin, and another division knows what they’re doing but they’re all speaking Cantonese,” Whitney says.

“If you’re leading regulatory reform, you have to have the technology as well, and they have not embraced technology.”

Warren Buffett expressed optimism about the banking sector during a recent interview with ABC.

“Actually, banks are doing very well on new business, and their deposits are coming in,” Buffett said.

“Those 19 banks [that received bailout money] will all be OK.”